Transcript

Hello. Welcome to Pharma Marketing talk. This is your host John Mack, and today we're going to be talking with Daniel Palestrant, who's the founder and CEO of Sermo, which is an online physician network. We're going to be focusing on how the pharmaceutical industry has interacted with physicians on Sermo.

Sure. Sermo is the largest online physician community. One in five U.S. physician's a member. We are a place where doctors come to interact with one another, share insights, and in doing so, improve patient care. Our business model is that we allow our clients, which are 10 of the 12 largest pharmas and biopharmas, and about 260 clients in several different industries to interact with those physicians either through engagement, [INAUDIBLE PHRASE], and also in using the community as a way to get their message out.

Right. Now I remember some time ago, I'm not quite sure when, Pfizer had signed up to work with Sermo as one of the first pharmaceutical companies that you've had client relationships with. Now, I know a little bit about it, but maybe you can explain to our audience how the pharmaceutical industry, what options they have in terms of working with Sermo and the physicians on Sermo, what kinds of information are they looking for, and how do you help pharmaceutical companies do that?

Sure. So we have a physician community where doctors login thousands of times a day. All of them are authenticated and credentialed, so we can verify that they are, in fact, a licensed U.S. physician, and that they are -- each identity is held by one physician and one physician only. It also allows us to tie each physician back to an ME number or a UPIN number, which is for marketeers is valuable because you can map activity inside of the community to prescribing patterns and other sort of demographic information.

But we also have a whole separate suite of products that allow our clients to interact with that community in various ways. So let me concentrate on two of those products, and I'll use that as an opportunity to talk about some of the ways that we're seeing Pharma use the site. One of our products is a product called Client Center, and what Client Center is is it allows our customers to login and search activity in the site. I might be interested in cardiologists discussions on interventional devices, or I might be interested in current perceptions around prevacid or a new statin. Not only can they search that information and see the conversations among those physicians, but once they've completed a search they can actually save that search and set it up so that they're alerted whenever there's a comment or a discussion around their product or a competitor's product or maybe even a disease area. So that Client Center allows people in all different parts of the pharmaceutical organization to get extremely valuable real time information around their products.

The other product, and actually the one that we've actually been seeing some extraordinary growths on, is a product called Panels. This is actually designed in conjunction with one of our largest pharmaceutical clients, and what it does is it allows a client to be able to invite physicians into a closed confidential area and have discussions, if you will, around a very specific topic, and they can target physicians based on geography, level of training, prescribing patterns -- any metric that they might want, and have a very specific discussion or engagement with those physicians. That product has been growing like a weed. Usage of that product among our pharmaceutical clients was up 200% from the first quarter to the second quarter of this year.

Yeah. We are absolutely seeing clients starting to scale up those Panels and do multiple Panels around the country with a with a key opinion leader. In fact, we have a name for that, we call that a grassroots launch, and in the next few months you'll see a number of products rolling out, either new indications or whole new products, through that method.

The main way that people are currently using Panels though is a brand team might be looking for insight as to how PCPs or cardiologists are viewing a particular issue or a particular product. What they're able to do is set up a series of topics and then either by themselves or Sermo assisting as a moderator, dive into that engagement with those physicians. The quantity and the speed that that information can be gleaned is pretty extraordinary.

It depends on which one of use cases. In terms of the community itself, the community is free of charge to the physicians, and the majority of the motivation is for peer-to-peer interaction. You see extraordinary value among the physicians of being able to talk to one another, kind of in the way that it used to happen in hospitals or many years ago in doctors lounges, and many years before that, perhaps, on a golf course. But the main motivation is for the peer-to-peer interaction. In cases where the information isn't public, in other words, it's going to be kept proprietary and owned by that customer, we actually do compensate the physicians, but that's actually a very small fraction of the overall activity on the site.

I recall that one of the business models you had was to not get in to way if physicians on your site wanted to have an independent relationship with the pharmaceutical company outside of Sermo, say, for example. Is that correct? I mean physicians can just make good contacts with the pharmaceutical industry that way.

That's right. We're not in the business of policing the relationships that physicians have with outside parties. We do ask them to disclose any conflicts that they might have, but we certainly don't police that or try to control it.

Well, an unrelated matter, one of the things I have been interested in for a long time is to figure out these physicians online, are they different from every day physicians. For example, I know that the pharmaceutical industry has gone to academia and big research centers to seek out these key opinion leaders who may have published articles in the leading journals and so on to be speakers at CME meetings and so on. Are there equivalent key opinion leaders, online key opinion leaders, who may not be in that same group of type of physicians but who have a very good reputation online, on Sermo, for example, who are influential online?

Let me divide up your question to two parts. I heard one is what are the demographics or dynamics of the Sermo community? Then do we have our version of key opinion leaders and thought leaders like you have in the offline world?

To the first question, from a demographic, from a geographic distribution, and certainly from a specialty distribution, the community is remarkably similar to the understood distribution of physicians in this country, which was a big relief. I would have been very concerned if Sermo were exclusively on the coasts or it was exclusively academic physicians or exclusively residents. So when we've done the research we've actually found that it correlates very well. The one exception to that is among our power users. This is perhaps where I was most surprised. It turns out that our heaviest users aren't younger physicians, which is what one might have expected given that it tends to be younger physicians that are the early adopters -- typically, younger people are typically early adopters of new technology. Our power users, meaning the people who are logging in multiple times a week, most physicians 45 and older outnumber the 45 and younger 3:1.

That was quite a surprise certainly to me. It's worth sort of exploring why -- it was so unusual, not only did we check and recheck this, but we did a lot of surveying and research to try and understand it. What we discovered was that the older the physicians became, not only did they become busier and busier, but their opportunities to interact with other physicians became less and less frequent. They didn't have as many friends who were physicians, they weren't going to conferences as often as they once went to, and that desire for collegiality for interaction seems to be better facilitated by Sermo than some of the offline approaches to interaction.

Interestingly, those physicians, the busiest ones see more patients, they write more prescriptions, and almost as a rule, are the ones that pharmaceutical companies have the hardest time getting in front of.

So those physicians are sort of in many ways the most desired for marketeers to be able to interact with, either via our Panels product for research or for promotion, using our various sponsorship and promotion technologies.

Well, do you see a trend in the pharmaceutical industry getting more involved with this -- I guess they're called non-personal communications with physicians because they're having a hard time reaching them in the office or at these conferences?

Without a doubt. I think that the numbers are pretty compelling and pretty broadly accepted that it's becoming more and more expensive and difficult for a pharmaceutical company to reach these physicians either because the physicians themselves have put up road blocks or because the organizations that they are in have become increasingly leery about allowing members of industry to interact directly with them. So the amounts of interest and the amount of resources and money that's being put towards these various types of online interaction is clearly increasing.

To the other point that you made there's another trend which is interesting. There used to be a very, very strong industry affinity towards classic key opinion leaders, and these are typically people almost as a rule coming from large academic medical centers. With the advent of these new communities, these new ecosystems, we've seen what we hear a lot of our pharmaceutical clients describe as green pasture KOLs.

Green pasture as in it's untilled earth. It's a green pasture. It's a new area where there's a whole new set of people who are influencing, a whole new set of people who are the ones that are followed. It's very interesting. The community jokingly refers to themselves as the Joe Six Pack physicians.

Well, I think that there's been a gradual trend where the physicians in the field, the physician who are in this country treating the vast majority of patients increasingly don't identify, much less agree with, physicians in academic settings. I think that the healthcare reform debate actually accelerated this trend where the academicians were disproportionately in favor of healthcare reform, and the private practice physicians were vastly disproportionately against it. What that led to was more and more discontent or animosity between the two different groups. What that's meant is that if you're looking for people who will connect with and be viewed as leaders, more and more those physicians in the field, the ones who are seeing the majority of patients, who are writing the majority of scrips, just don't identify with academicians the way that they once did.

I don't think it's necessarily that they don't trust those parties anymore. I think what it's more of is that they're identifying more with other physicians. One of the most influential oncologists in Sermo happens to be a very, very well-read, very intelligent, very articulate oncologist that's a year out of his Fellowship. This person is very well respected in the community and has developed a tremendous following in the community, and this person's opinion on various treatments or strategies is actually held in great stead.

Well, that's exactly what I was thinking might be happening. So it's interesting to hear you say that and give a specific example of that. Do these physicians who are active like this on the site, are they educating their peers or are they just in discussions? I mean I've talked to other physician network owners who are talking about physicians uploading things like x-rays of their patients that are de-identified and things like that to educate their peers. Does that sort of thing also happen on Sermo?

Without a doubt. I mean we're seeing a tremendous amount of peer-to-peer interaction, and it's becoming more and more accepted. I think to maybe perhaps to personalize it a little bit, I remember four or five years ago when I left surgery to start Sermo, one of the retorts that we heard was people saying that physicians would never trust anything that they got online, much less out of a community. For myself as a physician and a son of a physician, it was always a question of importance of who would you send your family to? Like God forbid a family member were sick and needed a physician, who's the physician that you would trust?

One of the most fascinating things that I've seen on Sermo is more and more cases where physicians are using the community to gather input, not just for their patients, but more and more for their family members and for friends. So we have lots of cases where physicians will say here's a problem I have with my child or my child has this problem or that problem and ask the community to help solve it. We have a lot of situations where physicians had a parent in the intensive care unit or in the operating room and were sort of almost blogging into the community about the challenge that they were dealing with, and ultimately how they addressed it.

I know you're pretty busy and I just wanted to say at this point if there's any questions from people who are listening, if you're on the phone right now just press one to raise your hand, and if you want to call in the number to call is 347-996-5894, or if you're in a chat you can ask a question.

I know you are pretty busy, Daniel, but this idea of trusting online, can you explain -- and the idea that some physicians are not allowing Pharma reps to come into their offices and interfere with their day-to-day work. How does that translate over to the online world where there are, for example, on Sermo there are Pharma companies who are listening in or who are participating, how you maintain the level of trust in your community?

I think that much of that comes down to being transparent with the community about our business model, being clear with the community about how we make money, and also certainly being tru to the covenant that we have with the community where we do harvest information from the community, but we never allow our clients to see the identity of the physicians. It has to be something that the physician and the client mutually agree upon.

One other question I had. Of course, I'm not a doctor, I can't get into Sermo and see how things go on there. But how do you as Sermo maintain your relationship with your members? Do you contact them in a newsletter and let them know what's going on? How do they know what's going on and the plans that Sermo has and the opportunities that they can have on the site?

We certainly have the good fortune of having a very active community, so that the physicians login on a very regular basis, and it's something that we've long benefited from. Also, we do a lot of the things that you just described. We certainly do email sort of summaries of activity in the site, we allow physicians to forward posts to one another -- that certainly is as important. All of those contribute to sort of high levels of physician activity.

OK. Well, we only have a few minutes left, and i just want to give you an opportunity to, if you can tell us if you have some future plans for Sermo that you might be able to share with us, or if you wanted to talk about something we didn't get a chance to talk about, we still have a few minutes if you want to do that?

Sure. I think for Sermo, the next phase for us is really focusing on what we know is working. We've had some extraordinary growth in our physician activity, in our client activity. In fact, just this past week we announced the launch of our second generation platform, so this is an entirely new physician experience, entirely new client experience. So all of our client tools have gotten the benefit of the last two or three years of research and learning, and so they're much faster and easier to use. We've been just delighted to see how well received they've been by both the physicians and the clients. That's I think perhaps where we've been the most delighted, if you will, of late.

Well, I appreciate the time you spent, and hopefully we can talk some more at a later time and get some more information about Sermo. If there's no other questions from the audience, then maybe this is a good time to stop and let you get back to you meeting.